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Enhancing Regulatory, Financial, Fiscal Investment Incentives as a Means of Promoting Foreign Direct Investment

Enhancing Regulatory, Financial, Fiscal Investment Incentives as a Means of Promoting Foreign Direct Investment
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Author(s): Jon Edwards (Oxford University, UK & Goethe University, Germany)and Sarah Newton (Kent University, UK)
Copyright: 2016
Pages: 11
Source title: Analyzing the Relationship between Corporate Social Responsibility and Foreign Direct Investment
Source Author(s)/Editor(s): Marianne Ojo (North West University, South Africa)
DOI: 10.4018/978-1-5225-0305-7.ch013

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Abstract

According to UNCTAD, regulatory incentives, which include “lowering of environmental, health, safety or labor standards; temporary or permanent exemption from compliance with applicable standards; stabilization clauses guaranteeing that existing regulations will not be amended to the detriment of investors”, in addition to financial incentives, are considered “less important policy tools for attracting and benefiting from Foreign Direct Investment.” Whilst survey results, also illustrate that fiscal incentives are the most important type for attracting and benefiting from foreign investment, it is also highlighted that certain scenarios exist whereby investment incentives could be regarded as “compensation for information asymmetries between the investor and the host government, as well as for deficiencies in the investment climate, such as weak infrastructure, underdeveloped human resources.” This chapter not only explores how environmental incentives can serve as means of attracting investment, but also contributes to the literature on how their effectiveness could be enhanced.

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